Insights into Canada’s Housing Market Forecast: 2026 and Beyond
In a recent episode of In-House – Canada’s Housing Podcast, Joelle Hamilton, from CMHC’s Communications and Marketing team, hosted Deputy Chief Economist Kevin Hughes to delve into the 2026 Housing Market Outlook. This article will summarize their insightful discussion, highlighting the key forecasts, trends, and potential challenges facing Canada’s housing market in the years ahead.
Economic Backdrop
As the podcast kicks off, Joelle emphasizes that 2026 is already shaping up to be a tough year economically. Kevin explains that about a year earlier, CMHC faced significant uncertainty, prompting the introduction of various growth scenarios for the economy. Now, a clearer picture is emerging, although uncertainty still looms, particularly concerning consumer spending and household formation.
A noteworthy point raised by Kevin is the reduction in immigration, which traditionally fuels housing demand. Alongside this, uncertainty is dampening private sector investment, thus contributing to a slower economic growth rate predicted at around 0.7% for 2026.
Impact on Housing Demand
Kevin elaborates that individuals are likely to postpone home purchases due to this economic uncertainty. The conversation leads to a significant point: housing demand is intrinsically linked to various factors, including affordability and ongoing economic conditions.
As Kevin elucidates, this cooling-off in demand isn’t isolated; the overall construction landscape is also undergoing challenges. High inventories, particularly in the condo market, are influencing supply. Predictions indicate weaker demand and supply growth from 2026 through 2028, showcasing a pronounced effect on house prices.
Housing Starts Forecast
The discussion naturally transitions into construction metrics. Despite having finished strong in 2025 with approximately 260,000 new units — the third-highest annual total on record — Kevin forecasts a moderation in housing starts for 2026. He notes that while construction was buoyed by decisions made during periods of lower interest rates, that momentum appears to be waning.
Ontario is anticipated to experience a significant decrease in housing starts. Conversely, regions like Quebec and the Prairies may retain some construction strength thanks to more affordable housing options and favorable demographics.
House Price Stability
Following the forecast for housing starts, Joelle raises a critical question about house prices. Kevin predicts stability in prices for the broader Canadian market, though warns of potential regional disparities. Ontario might see a decline in prices, while British Columbia might witness slight increases due to composition effects related to the condo market. In contrast, Quebec and the Prairies could see moderate price growth.
Rental Market Trends
Joelle pivots the conversation toward the rental market, where Kevin highlights that purpose-built rental construction saw a surge in 2025 thanks to government initiatives like the Housing Accelerator Fund. However, with reduced immigration and less household formation, the rental market could experience less strength moving forward.
Kevin explains that many young potential renters continue to live with families due to high rental costs, which could dampen demand. As the supply side gains momentum with new projects, the rental market may not be as tight as in previous years, creating a mixed outlook.
Ground-Oriented Homes
The dialogue shifts again as Joelle inquires about ground-oriented homes, such as townhouses and detached homes. Kevin points out that while this segment is often overshadowed, it still remains crucial for many Canadians, especially in regions where multi-unit dwellings aren’t feasible. He predicts a relatively stable market for ground-oriented homes, with localized challenges and opportunities influencing future growth prospects.
Challenges Ahead
The podcast closes with a challenging outlook for the housing market, with two primary risks surfacing. One potential risk is tied to the upcoming decision regarding the CUSMA agreement, which could significantly impact international trade and economic confidence. The second pertains to government spending: while government projects are positioned to promote growth, delays in project implementation could eventually hinder progress toward economic recovery.
Conclusion
Joelle and Kevin conclude their discussion on a hopeful note, indicating plans for a summer update on the housing market. They emphasize the importance of remaining informed and responsive to the shifting landscape of housing in Canada.
As the uncertainty of the current economic environment continues, understanding these trends and risks surrounding the housing market will be essential for stakeholders, policymakers, and homebuyers alike. The insights shared in this episode of In-House – Canada’s Housing Podcast offer a valuable retrospective and a forward-looking perspective that can help navigate the complexities of Canada’s housing market in the years ahead.
